UPDATE: Investors are flocking to Legal & General (LSE:LGEN) as the stock emerges as the highest-yielding option on the FTSE 100, currently boasting an impressive dividend yield of 8.7%. With a steady increase in dividend payments expected, now is a critical time for income investors looking to enhance their portfolios.
In a market ripe with opportunities, Legal & General has maintained its dividend since the 2009 global financial crisis and is projected to increase payouts by 2% annually from 2025 to 2027. If the company fulfills this commitment, its dividends will be nearly six times higher in cash terms by 2027 compared to 2009. This reliability is drawing attention from investors eager for consistent returns.
Legal & General’s success is largely attributed to its strong position in the pension risk transfer (PRT) market. As many pension funds shift from deficit to surplus, the demand for third-party providers is escalating. In the past three months alone, Legal & General has taken over management of pension schemes from BP and Ford, managing a combined £6.2 billion in assets. Analysts project that over the next decade, insurers will secure £1 trillion in funds across the UK, US, and Canada.
However, investors should be aware of the competitive landscape. Legal & General’s share price has struggled, declining by 4% since November 2020, while the FTSE 100 has surged by 52% during the same period. Despite this, the company’s respected reputation is helping it win new business, as evidenced by the 299 PRT transactions recorded in 2024, including 14 deals exceeding £1 billion—one-third of which were secured by Legal & General.
While Legal & General stands out, savvy investors should also explore other lucrative options. Currently, 10 stocks on the FTSE 100 offer yields exceeding 5.5%, outperforming traditional high-interest savings accounts. In the FTSE 250, 13 stocks provide yields higher than Legal & General’s, including several investment trusts within the renewable energy sector.
Despite the challenges, Legal & General’s position as the highest-yielding stock on the FTSE 100 is likely to continue attracting attention, especially from income-focused investors. As market dynamics shift, more opportunities may arise, making it essential for investors to stay informed.
For those considering a £1,000 investment in Legal & General, the insights from investing expert Mark Rogers could be invaluable. His recommendations have proven fruitful for thousands of members of the Motley Fool Share Advisor newsletter, which has highlighted top stock picks for nearly a decade.
As the landscape evolves, investors are encouraged to monitor developments closely. Legal & General’s ability to sustain its dividends amidst competition will be a key factor in its long-term growth trajectory. Keep an eye on this stock, as it continues to capture the interest of passive income seekers worldwide.
